Breakeven
Margin of Safety
DOL
Contribution Margin
CVP Extra!
100
Break-even Point is the point where revenues equal what?
Total Costs
100
The formula for Margin of Safety in units is?
Expected Unit Sales - Breakeven Unit Sales
100
Degree of Operating Leverage measures the use of what?
Fixed Costs
100
What is the formula for contribution margin?
Revenue - Variable Cost
100
CVP assumes all costs behave in what kind of fashion?
Linear
200
Contribution margin divided by sales revenues equals
Contribution Margin Ratio
200
XYZ Co. expects to sell 104,000 units. Their break-even point is 64,000 units. Last month they sold 115,000 units. What is their current months margin of safety?
40,000 units
200
What is the formula for DOL?
Contribution Margin / Operating Income
200
This percentage indicates how much of every Revenue dollar goes toward recovering fixed costs and earning a profit.
Contribution Margin Ratio
200
Multiplying a unit's contribution margin by their product mix gives what?
Weighted Average Contribution Margin
300
Fixed Costs = $290,000
Prices per Unit = $500
Variable Costs per Unit = $210
Find the Break Even Sales
1,000 units
300
Using the following, calculate the margin of safety %
53%
300
Using the following calculate the DOL:
1.89
300
A company's only product sells for $150 per unit. Its variable costs are $90/unit and its fixed costs total $96,000. What is its contribution margin ratio?
40%
300
A company expects to sell 1 skateboard for every three wake boards. What is their product mix in percentages?
25% skateboard/75% wake boards
400
Selling Price = $250
Variable Cost per Unit = $150
Fixed Costs = $10,000
Target Profit = $13,000
Find the Required Sales in Units to meet the Target Net Income
230 Units
400
Sam's Subs sells sandwiches for $5.50 each. The break-even point in sales is 4,000 sandwiches and Sam expects to sell 6,500. What is the margin of safety in dollars?
6,500 - 4,000 = 2,500
2,500 * $5.50 = $13,750
400
McGovern Industries has a DOL of 3.64. Calculate the change in profit given a change ins sales of 46%.
167%
400
What is the order of accounts on a contribution margin income statement?
Sales Revenue - Variable Costs = Contribution Margin - Fixed Costs = Operating Profit
400
What are some business decisions CVP analysis can assist in making?
Pricing
Cost Structure
Production/Sales Volume
500
ABC company sells two products, Product A and Product B. The company has $72,500 in fixed costs. How many units of A do they need to sell to break-even?
150 units
500
Decreasing total fixed costs will do what to a company's margin of safety?
Increase the margin of safety
If fixed costs decrease, break-even point will decrease, therefore the companies margin of safety increases.
500
Company A has a DOL of 1.5 and currently has an operating income of $10,000. If they reduce their fixed costs to obtain a operating profit of $12,000 what is their new DOL?
1.25
500
Chippy Chips company's contribution margin ratio is 35%. If the contribution margin per unit is $7.00, what is the selling price?
$20
500
Using the following information determine which company is better suited to withstand a recession:
Company B due to a lower DOL
DOL (A): $900,000 / $200,000 = 4.5
DOL (B): $4,000,000 / $2,000,000 = 2.0